In a landmark deal set to reshape the cybersecurity landscape, Google is nearing the acquisition of Israeli cloud security startup Wiz for a staggering $23 billion. Announced in mid-July 2024, this acquisition marks Google's largest purchase to date and signals its intent to strengthen its cloud security offerings amid stiff competition.
By integrating Wiz's advanced security solutions, Google aims to attract more enterprise customers and enhance the overall security of its cloud services. To date, Google’s lack of security means that its cloud offerings chiefly attract individual consumers, a market where it does enjoy a significant lead over its rivals.
However, by bolstering its enterprise cloud security, it could position itself as a formidable competitor in the corporate sector as well.
In fact, many see Google's move to acquire a cybersecurity company like Wiz as a direct response to the massive security failures that have rocked rivals like Microsoft throughout the last year.
Wiz calls itself the “#1 Cloud Security Software for Modern Cloud Protection.” Founded in 2020 by Assaf Rappaport, Ami Luttwak, Yinon Costica, and Roy Reznik, it has seen rapid growth thanks to its innovative cloud-native security solutions. The company was founded in Israel but has since migrated its headquarters to New York.
The founders, who previously worked together at Microsoft's cloud security group, built Wiz with the aim of creating a massive, influential company. Their earlier venture, Adallom, was sold to Microsoft for $320 million, setting a precedent for their success.
The company offers “siloed security tools and scanners” for enterprises, securing corporate cloud infrastructure “by creating a normalizing layer between cloud environments,” according to the company. One of its chief goals is empowering businesses to “rapidly identify and remove critical risks.”
Previously, Wiz had managed to raise over $600 million in funding from top investors such as Sequoia, Insight Partners, and Index Ventures. The startup achieved a valuation of $6 billion within just two years of its founding, with its clientele comprising multiple Fortune 500 companies.
Its platform is often praised for its comprehensive visibility, ease of deployment, and ability to operate seamlessly across various cloud environments. In a relatively short time, it managed to establish itself as a leader in innovation and customer-centric security solutions in the highly saturated and competitive cybersecurity industry.
Google's motivation for this eye-watering purchase is to enhance its cloud security offering and catch up with competitors Amazon and Microsoft. Unlike its rivals, Google has lagged in establishing a robust cybersecurity strategy.
In fact, Google’s cloud platform currently holds only 10% of the market share, compared to Amazon's AWS at 32% and Microsoft's Azure at 23%. One major reason for this gap is the lack of advanced cybersecurity features that many enterprise customers consider essential.
As a senior investor in the venture capital industry noted, "Google's cloud activity is growing fast, but it is trying to catch up mainly in the organizational-enterprise aspect. It has no cybersecurity, and many customers choose competitors precisely because of this."
Wiz's advanced cloud-native security solutions provide comprehensive visibility and threat detection across cloud environments, which align perfectly with Google's need to bolster its cybersecurity capabilities.
The acquisition of Wiz may finally empower Google to catch up to its main competitors in this regard and make greater inroads in the corporate space.
Google CEO Sundar Pichai has emphasized the importance of this acquisition for the company's strategic goals. This move is expected to provide "enormous value to the cloud market."
This acquisition would surpass Google's previous largest purchase, Motorola Mobility, which was acquired for $12.5 billion in 2012. It also follows other strategic acquisitions aimed at bolstering its cloud security, such as the half-billion-dollar purchase of a cloud security startup in 2022 and the $5.4 billion acquisition of Mandiant, known for discovering the SolarWinds hack.
Google's intention to acquire Wiz for $23 billion has sent ripples through the Israeli and global high-tech industries. This deal, if finalized, would not only be the largest in Israeli high-tech history but also the largest purchase of a private cybersecurity company globally.
As Dror Bin, CEO of the Israel Innovation Authority, remarked, "The presence of multinational companies in Israel and their expression of trust, especially during this period, are of great importance to Israeli high-tech."
Pursuing a sale to Google is driven by more than financial gain, according to Rappaport and the other co-founders. It’s a strategic gameplay that presents a unique opportunity to scale their technology globally through Google’s ubiquitous cloud infrastructure.
As Sam Meenasian, the Operations Director of USA Business Insurance, noted, "The potential acquisition of Wiz by Google is great news for the cybersecurity and cloud industries. This move will benefit Israel's ecosystem and confirm that the future is in cloud technology. It also highlights the importance of building comprehensive platforms to protect the cloud rather than relying on specific features from individual companies."
This sentiment is echoed by industry leaders. "The team at Wiz is doing an amazing job. They've built a beautiful product and are selling to the biggest companies in the world. It's exciting to see new entrepreneurs succeed," said Gil Shwed, CEO of Check Point.
The deal holds significant implications for the local Israeli cyber industry as well. A senior venture capital investor commented, "A huge industry will take a huge jump forward. It will provide enormous value to the cyber market and enormous value to the cloud market, which the giant companies see as a strategic target."
Bin emphasized the deal's timing, noting its importance during challenging times for Israeli high-tech, "The news about the deal takes on new importance in light of the situation. Whether the deal comes to fruition or not, it is a huge expression of confidence that the world has in the Israeli tech industry, which continues to prove itself in every situation."
He added that while the deal will contribute to Israel's tax revenues, the impact on the country's economic situation will be significant but not sufficient to close the existing deficit.
While it’s not a done deal, the mere possibility of this watershed deal is sending shockwaves through the cloud platform and cybersecurity markets. Rival companies, detractors, potential enterprise clients, and industry heads will all be monitoring the situation with great interest.
As Google positions itself to redefine cloud security standards, the industry must brace for a paradigm shift that could set new benchmarks in cybersecurity and cloud service integration. Competitors, like Amazon and Microsoft, might find themselves playing catchup.